Top 5 Changes in Sales Tax Compliance…Are You Ready?

In November my blog gave you many tips to get ready for the new year. Now the new year is here and changes are in effect. Are you ready?

Here are the top 5 changes related to sales tax compliance that you should be prepared for:

1. Filing Frequency Changes – Many jurisdictions have reviewed the previous year’s filing history and are making changes to your account. Some jurisdictions will mail your notification of this change, but please be aware that other notifications may come electronically - especially if you file online. Not updating your filing frequency will cause notices and may cause penalty and interest if your account switched to a more frequent filing frequency.

2. Rate Updates – January brings the largest number of rate changes of the year. If you are contracted with a third party to procure your rates, then most likely you are prepared. However, if you have to manually program your rates into your ERP or POS system, then you might be behind. Easch jurisdiction does a pretty good job announcing their rate changes on their website, by mail and some by phone. You should check and make sure you have the most current tax rate.

3. Jurisdictional Changes – We saw two major changes with telecom taxes for January. California introduced the CA MTS. This is for prepaid mobile Telephone Services. There are significant differences for retailers vs. direct sellers, so it is important to understand the new filing requirement. Another big change we saw with Telecom is the IL local E911 returns are now all being reported to the State instead of directly to the individual jurisdictions.

4. Electronic Filing and Payment Requirements – Similar to changes in filing frequencies, the states have likely reviewed the filing history and thresholds may have been met to trigger an online filing or payment requirement. Also, more and more jurisdictions are trying to go paperless and are making these electronic methods mandatory.
   

5. New or Changing Prepayment Requirements – The new year may also bring about a requirement for prepayments. These may also be known as estimated payments or deposits. Prepayments are generally required for taxpayers that remit larger tax liabilities. If your business has grown, you may have reached a threshold to trigger the prepayment. Again, these notices may not come in the mail, but could be communicated electronically through your online account. Kansas is one of those states.

Are you overwhelmed yet? Just review your jurisdictional notices carefully and remember the notices could be provided to you online.